q1 2020 earnings presentation · earnings presentation 3 diesel-4.1 jet fuel-5.7 hs fuel oil-9.7...

Hizmete Özel / Confidential

Q1 2020 Earnings Presentation

21 May 2020


Disclaimer

www.tupras.com.tr21/05/2020Earnings Presentation 2

This presentation contains forward-looking statements that reflect the Company management’s current views with respect to certain future events. Although it is believed that the expectations reflected in these statements are reasonable, they may be affected by variables and changes in

underlying assumptions that could cause actual results to differ materially.

Neither Tüpraş nor any of its directors, managers or employees nor any other person shall have any liability whatsoever for any loss arising from use of this presentation.


15

30

45

60

75

90

02/01/2019 02/04/2019 02/07/2019 02/10/2019 02/01/2020

Q1 2020 Key Market Highlights


Diesel-4.1

Jet Fuel-5.7

HS Fuel Oil-9.7

Gasoline+2.4

Sharp decline in Brent in Q1 2020

Glo

bal

Oil

Mar

ket

Turk

ish

Mar

ket

Turkey product demand not showing Covid-19 impact in first two months

Mid-distillate and HSFO cracks performed weaker

*Including transit flight consumption

Crack margins compared to Q1 2019, $/bbl Q1 2019 Ave.63.2 $/bbl

Q1 2020 Ave.50.3 $/bbl

2M 2020 vs 2M 20195.94

5.97

6.23

6.52

5.8

6

6.2

6.4

6.6

6.8

31/12 10/1 20/1 30/1 9/2 19/2 29/2 10/3 20/3 30/3

$/TL

TL deprecation accelerated in Q1 2020

+0.03 TL

+0.26 TL

+0.29 TL

+7.7%

Diesel

+7.3%

Gasoline Fuel Oil

-34.8%+0.2%

Jet Fuel*


Q1 2020 Tüpraş Highlights

www.tupras.com.tr 421/05/2020Earnings Presentation

In Q1 20206.0 -1,3076.2

Million tons of

Total Production

Million TL

EBITDA

Million tons of

Total Sales

• Weak Q1 performance is largely a result of sharp drop in Brent prices.

• Looking forward, recovery in Brent prices will reflect to Tüpraş accordingly.

Being local helps in elevated freight cost environment

Widening trend in differentials continues

Sharp drop in Brent price is the lead factor behind weak results

-2,500

-2,000

-1,500

-1,000

-500

0

500

1,000

1,500

2,000

2,500

-100

-80

-60

-40

-20

0

20

40

60

80

100

Q1

'17

Q2

'17

Q3

'17

Q4

'17

Q1

'18

Q2

'18

Q3

'18

Q4

'18

Q1

'19

Q2

'19

Q3

'19

Q4

'19

Q1

'20

Inv. impact (TRYm) Chg. in Brent pr.(TRY, q/q)

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Jan

-19

Mar

-19

May

-19

Jul-

19

Sep

-19

No

v-1

9

Jan

-20

Mar

-20

CIF-FOB Price Spread ($/bbl)

-6

-5

-4

-3

-2

-1

0

Q1

'18

Q2

'18

Q3

'18

Q4

'18

Q1

'19

Q2

'19

Q3

'19

Q4

'19

Q1

'20

Average* of Heavy Crude-Brent Differentials ($/bbl)

* Simple average of Arab Heavy, Basrah Heavy, Kirkuk, Kuwait and Ural.

• Freight costs continue to rise as floating storage usage of ships continues.

• This elevation supports our competitiveness against importers.

• Widening in heavy crude differentials, which began as refiners started preparing for IMO 2020 in H2 2019, resumed in Q1 2020 as well.


Market


-5.8

-9.9

-12.4

-28.9

-15.5

Q1 Q2 Q3 Q4

High Sulphur Fuel Oil

15.4

12.2

15.6

14.511.3

Q1 Q2 Q3 Q4

Diesel

Quarterly Crack Margin Comparison ($/bbl) in 2016 - 2020


Covid-19 impact on crack margins has started to be visible for jet and gasoline in late Q1 2020.

13.8

10.8

16.1

13.18.1

Q1 Q2 Q3 Q4

Jet Fuel

4.5

10.5

12.4

8.56.9

Q1 Q2 Q3 Q4

Gasoline

2020 2019 2016-2020 Min - Max

Usage of FCC feedstock in VLSFO production

Lower demand due to IMO 2020-

+

Mild winter

- -

-

Weak demand on the back of slowing global economy and mild winter

Mild winter conditions supporting passenger car transport demand

Severe drop in global aviation activity due to the Covid-19 outbreak

+

Travel lockdowns around the globe driven by the Covid-19 outbreak

-Run cuts by simple refineries reduce supply+

Largely resilient against Covid-19 impact as diesel is used mostly for heavy duty transport and logistics

+


Heavy Crude Price Differentials to Brent ($/bbl)

www.tupras.com.tr 7

-10

-8

-6

-4

-2

0

2

Q1

20

17

Q2

20

17

Q3

20

17

Q4

20

17

Q1

20

18

Q2

20

18

Q3

20

18

Q4

20

18

Q1

20

19

Q2

20

19

Q3

20

19

Q4

20

19

Q1

20

20

Arab Heavy

Basrah Heavy

Kirkuk

Kuwait

Ural

Average*

0

OPEC+ Cut Decision

Iran Sanctions

*Simple average of listed differentials

In Q1 2020, differentials widened compared to Q4 2019 on the back of higher supply against weaker demand andIMO driven feedstock shift to lighter crude

21/05/2020Earnings Presentation

IMO preparations


Operations


Capacity Utilization and Quarterly Production Volume


6.76.9

7.5

6.9

6.0

Q1 Q2 Q3 Q4

Quarterly Production (Million Tons)

2016 2017 2018 2019 2020

10

1

10

1

87 91

89 91 96

87

79

4 7

9 7 4 59

9

6

105 108

96 9894 96

105

96

85

2016 2017 2018 2019 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20

Capacity Utilization (%)

Crude Oil Semi Product Feedstock Total

*Capacity utilization calculation is based on 30 mn tons for Q1 2019 and onwards.

• We produced 6.0 mn tons in Q1 2020

• Capacity utilization for Q1 2020 was 85% with much higher white product yield at 86%.


Sales in Q1 (Million Tons)

www.tupras.com.tr 10

5.1 5.0 5.2 5.24.6

1.8 2.31.0

2.1

1.6

6.97.2

6.2

7.2

6.2

Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020

Total Sales

Domestic Sales Exports

2.3 2.3 2.5 2.5 2.3

1.0 0.81.0 1.0

0.8

0.4 0.40.5 0.5

0.5

0.40.3

0.3 0.30.3

Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020

Domestic Sales of Selected Products

Diesel Jet Fuel Gasoline Bitumen


Tüpraş generated 6.2 million tons of sales in Q1 2020.


Financials


Tüpraş Net Margin and Med Complex Margin Comparison ($/bbl)


2.8

8.7

4.84.2

1.2

3.8

5.0

4.03.6

1.8

Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020

Q1 Margins

Tüpraş Net Med Margin

• Inventory loss and weaker crack margin environment were the main factors behind the decrease in Tüpraş net refining margin compared to Q1 2019.

• Med margin was higher than Tüpraş net refining margin mainly due to exclusion of inventory impact from its calculation.

Effect of hedging operations excluded from above calculations.


Income Statement (Million TL)


EBITDA realized as -1.3 billion TL in Q1 2020

*On CMB reports. EBIT includes extra items such as FX impacts of trade receivables and payables. In our EBITDA calculation. FX related items are excluded from EBIT as customary in international practices.

Million TLQ1 Q1

%2020 2019

Net Sales 16,940 20,708 -18%

COGS -17,849 -19,717 9%

Gross Profit -909 991 -192%

Operating Expenses -458 -373 -23%

Income/Loss from other operations -349 -390 10%

Operating Profit -1,716 228 -852%

Income/Loss from equity investment -168 63 -368%

Operating Profit Before Fin. Income/Loss -1,885 291 -747%

Financial Income /Expense -913 -601 -52%

Profit Before Tax -2,798 -310 -802%

Net Profit (excluding minority interest) -2,265 -375 -504%

EBITDA *(mn.TL) -1,291 851 -252%

Inventory Gain/Loss -2,016 301 -770%

EBITDA* (mn. TL) CCS 725 550 32%


Q1 Profit Before Tax Bridge (2019-2020)


Decline in Profit Before Tax was driven by inventory loss due to sharp drop in Brent Price.

Million TL


1.8

1.1

1.3 2.1

6.4

1.11.2

1.31.0 0.9

2.1

1.21.9 2.2

3.0

2016 2017 2018 2019 Q1 2020

Current Ratio & Net Debt / R. EBITDA

Net Debt / R. EBITDA

Current Ratio

Net Debt / R. EBITDA CSS

Financial Highlights


3351,575 1,033 851

-1,291

688

1,542 2,2101,495867

1,5283,778

9561,505

1,237

1,887

7383,396

5,882

8,908

4,039

-1,291

2016 2017 2018 2019 2020

EBITDA (mn TL)Q1 Q2 Q3 Q4

79869 378

-375

-2,265

331

1,4571,027

870581

992

542

-155

803

4931,766

186

1,793

3,812 3,713

526

-2,265

2016 2017 2018 2019 2020

Net Income¹ (mn TL)

Q1 Q2 Q3 Q4

22%

41%37%

5%

-12%

2016 2017 2018 2019 Q1 2020

Return on Average Equity²

1) Excluding minority interest 2) Calculation based on rolling net income


Balance Sheet Analysis (Billion TL)


-0.2

2.1

4.7

1.6

-0.7

-2.3-3.6

-2.0

Dec-16 Dec-17 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

Working Capital Requirement (Billion TL)

6.1 6.2

12.010.6 10.1

8.7 8.4

12.2

1.7 1.7

2.31.9 1.8 1.5 1.4

1.9

0

1

2

3

4

5

0

3

6

9

12

15

Dec-16 Dec-17 Dec-18 Mar-19 Jun-19 Sep-19 Dec-19 Mar-20

Net DebtIn Billion TL In Billion $

Proactive Financial Management

• Net debt increased due to lower working capital contribution and TL depreciation

• Dynamic liquidity management ensures optimal cash and receivables management

8.1

6.5

1.8 1.7

4.8

0.2

1 year 1-2 years 2-3 years 3-4 years 4-5 years Over 5 years

Redemption Schedule (Billion TL)

TL Hard Currencybn TL bn $


FX Exposure Management (31 March 2020)


Cash

681

Forward 1,327CFH 753

Stock826

Receivables & Other Assets

94

Payables & OtherLiabilities

981

ST Financial Loans729

• RUP: 204• Other: 525

LT Financial Loans1,874

• RUP: 575• Eurobond: 700• Other Loans: 599

Consolidated Hard Currency Assets

Consolidated Hard Currency Liabilities

Million $

+97 mn $

Tüpraş continues to employ strict FX

policies to mitigate currency risks

stemming from volatility.


Outlook for 2020


Q1 2020 Results


1.2

1.8

0 1 2 3 4 5

Q1

20

20

Refining Margins ($/bbl)

Med Margin Tüpraş Net Margin

84.6 % total capacity utilization in Q1 2020

6.0 6.224 25

Production Sales

OperationalsQ1 FY Target

6.2 mn tons of sales and 6.0 m tons of production in Q1 2020

29

125

Q1 2020 Target

Refining Capex (mn $)

29 mn$ refining CAPEX in Q1 2020

84.6

0 20 40 60 80 100

Q12020


1.2 $/bbl net refining margin in Q1 2020

Med FY Exp

Tüpraş FY Target


2020 Refinery Maintenance Schedule


Refinery Unit Quarter Duration (weeks) Status

Batman Plt 100/1100 Crude Oil & Vacuum Q1 10-12 Completed

İzmir

U-100 Crude Q1 9* Completed

U-4000 FCC Q4 6

U-9200 CCR Q1 3 Completed

U-9200 CCR Q4 7 Postponed to 2021

U-9600 Isomerization Q4 8 Postponed to 2021

U-9900 MQD Q4 7 Postponed to 2021

İzmit Plt-6 Desulphurizer Q4 4 Postponed to 2021

Kırıkkale

* This activity had started in Q4-19. Duration figure indicates the portion carried out in 2020


2020 Expectations(*)


• Ural-Brent differential widening compared to 2019

• Weak outlook for jet fuel and gasoline

Med Complex Refining Margin 1.0-2.0 $/bbl

• Weak outlook for jet fuel and gasoline cracks

• Resilient diesel and strong HSFO cracks

• Heavy crude differentials to widen

• ~24 mt production, ~25mt sales and 80 - 85% capacity utilization

Tüpraş Net Refining Margin 3.0-4.0 $/bbl

• Sulphur treatment units, improvement in storage units

Refining Capex ~125 million $

* During preparation of the revised 2020 expectations, it has been assumed that Covid-19's negative impact on crude oil and petroleum products demand will began to decrease by June and normal economic activity will resume starting from August.

Hizmete Özel / Confidential www.tupras.com.tr21/05/2020Earnings Presentation 22

Appendix


Turkish Market, Jan-Feb 2019/20 (Million tons)


3.29 3.55

0.0

1.0

2.0

3.0

4.0

2019 2020

Diesel

+7.7%

0.11 0.070.0

0.3

0.6

0.9

1.2

2019 2020

²Fuel Oil

0.34 0.36

0.0

0.5

1.0

1.5

2019 2020

Gasoline

0.66 0.66

0.0

0.5

1.0

1.5

2.0

2019 2020

¹Jet FuelMillionTons

¹Transit flight consumption included²Bunker excluded

-34.8%+7.3%

+0.2%


OPET


Opet has 1,693 fuel stations as of March 2020.

885 915 938 966 1,009 1,073 1,126 1,152 1,175 1,181

394 410 418 427435

431434 463 495 5121,325 1,325 1,356 1,393

1,4441,504

1,5601,615

1,670 1,693

2011 2012 2013 2014 2015 2016 2017 2018 2019 Q1 2020

Opet Sunpet

Market Shareas of February 2020

20.10 %

White Product

20.21 %

Black Product


Crack Margin Effect on Tüpraş in Q1 (FOB Italy Prices)


ProductProduct Price ($/ton) Tüpraş 2020 Crack Margin ($/bbl)

2020 Q1 2019 Q1 Production Yields 2020 Q1 2019 Q1

LPG 429 421 5.0% -12.0 -25.7Gasoline 464 550 21.4% 6.9 4.5Naphtha 381 473 1.0% -7.3 -9.8Jet Fuel 458 605 17.3% 8.1 13.8Diesel 458 585 39.2% 11.3 15.4Diesel 1000 448 570 1.5% 10.0 13.4Fuel Oil 1% 345 394 0.9% 3.0 -2.5Fuel Oil 3.5% 225 372 0.7% -15.5 -5.8Others 162 430 8.2% -14.5 -8.6

Dated Brent ($/bbl) 50.3 63.2 95.2%

Total Crack Margin ($/bbl) Total Processed 2020 Q1 (mn bbl)

Total Effect (mn $) Total Effect (mn TL)2020 Q1 2019 Q1 Difference

5.5 5.6 -0.05 44.6 -2.2 -13


LPG4%

Gasoline21%

Naphtha1%

Jet17%Gasoil

43%

Fuel Oil2%

Kok4%

Asphalt7%

Other1%

LPG Gasoline Naphtha Jet Gasoil

Fuel Oil Kok Asphalt Other

Light Distil.25%

Mid. Distil.60%

Black Prod.13%

Other white

2%

Q1 Product Yields


2020 Q1

White Product Yield (%) 85.7%

Production 6.0 mn tons

API 32.1

LPG4%

Gasoline20%

Naphtha2%

Jet17%

Gasoil33%

Fuel Oil15%

Kok2%

Asphalt5%Other

2%

LPG Gasoline Naphtha Jet Gasoil

Fuel Oil Kok Asphalt Other

Light Distil.26%

Mid. Distil.51%

Black Prod.21%

Other white

2%

2019 Q1

White Product Yield (%) 77.4%

Production 6.7 mn tons

API 32.4


Tüpraş Balance Sheet (Million TL)


31.03.2020 31.12.2019 Diff. Diff. (%)Current Assets 22,939 27,919 -4,980 -18

Cash & C. Equivalents 10,995 10,652 343 3

Trade Receivables 4,423 4,788 -365 -8

Derivatives 756 304 452 149

Inventories 5,300 9,469 -4,168 -44

Pre-paid expenses 97 237 -140 -59

Other Current Assets 1,368 2,470 -1,102 -45

Long Term Assets 28,018 27,593 425 2

Financial Assets & Subsidiaries 1,084 1,363 -279 -20

Fixed Assets 20,752 20,587 164 1


Pre-paid expenses 172 199 -27 -13

Deferred Tax 4,341 3,768 573 15

Other Long Term Assets 1,565 1,578 -13 -1

Total Assets 50,956 55,512 -4,555 -8Short Term Liabilities 24,707 28,120 -3,413 -12

Financial Loans 8,076 5,178 2,899 56

Trade Payables 11,704 17,816 -6,112 -34


Provisions 178 117 61 52

Other ST Liabilities 4,517 4,930 -413 -8

Long Term Liabilities 15,458 14,255 1,203 8

Financial Loans 15,102 13,898 1,204 9

Payables & Provisions 315 316 -1 0


Other LT Liabilities 9 9 1 6

Total equity attributable to equity holders of the parent 10,615 12,963 -2,348 -18

Minority Interests 176 174 3 2

Total Liabilities & Equity 50,956 55,512 -4,555 -8


Tüpraş and Med Margins ($/bbl)

www.tupras.com.tr 28

($/bbl)Gross

MarginInventory

EffectClean Gross

MarginClean NET

MarginNet

MarginMed Margin

2019 Q1 9.9 0.8 9.0 3.2 4.2 3.6

2019 12M 9.2 0.1 9.1 3.6 3.7 1.7

2020 Q1 7.1 -2.7 9.8 3.9 1.2 1.8

8.1

9.3

3.74.2

1.2

5.34.6

1.7

3.6

1.8

2017 12M 2018 12M 2019 12M 2019 Q1 2020 Q1

Margins

Tüpraş Net Margin Med Margin




www.tupras.com.tr 2921/05/2020Earnings Presentation

*Capacity utilization calculation is based on 30 mn tons for Q1 2019 and onwards. Nameplate capacity calculated by standard 330 days of operations.

101 101

87 91

4 7

97

105108

96 98

2016 2017 2018 2019

12M Capacity Utilization* (%)


94100

67

8979

57

11

4

6

100

106

78

94

85

Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020

Q1 Capacity Utilization* (%)



Finished Product and Semi Product Imports

21/05/2020Earnings Presentation 30

- -

189

233

-

HS Diesel ULSD Jet Fuel

Product Imports (Thousand Tons)

Q1 2020 Q1 2019

150 148

66

0

30

120

63

190

0

20

HVGO ASR F. Oil LSFO Naphtha MTBE

Intermediate Imports (Thousand Tons)

Q1 2020 Q1 2019

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Hizmete Özel / Confidential www.tupras.com.tr21/05/2020Earnings Presentation 31

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q1 2020 earnings presentation · earnings presentation 3 diesel-4.1 jet fuel-5.7 hs fuel oil-9.7...

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